Two days later, Dimitris Mardas,
the deputy minister of finance in charge of state revenue, declared that
€400 million was missing to pay for pensions and salaries at the end
of the month. A few hours later, he said the money was found and that he
was now trying to constitute cash reserves. But according to sources,
Mardas informed SYRIZA members of parliament at a meeting that same day
that the state reserves wouldn’t be able to make all payments in May.

And that’s despite, in terms of debt payments, May being a relatively
“easy” month, with only €750 million due to the International Monetary
Fund (IMF), plus another 400 million in interest payments.

June will be more difficult, with €1.5 billion due to the IMF, €700
million to the European Institutions, and 500 million in interest
payments. The burden is without a doubt untenable.

The blackmail Intensifies

The European Central Bank (ECB) did push up slightly the emergency
liquidity assistance (ELA) cap, but discussed the possibility of curbing
the funding of Greek banks beyond that. In an interview in Washington
on April 18, governing ECB council member Vitas Vasiliauskas said, “The
situation in Greece means that we should have a limit until summer for
ELA. Everyone understands what ELA means; it’s a temporary measure to
give the banks liquidity.”

But a more representative sample of the views of the two major
European institutions that together hold about two thirds of the Greek
debt, the ECB and the European Stability Mechanism (ESM), are to be
found in the interviews given on April 22 by Klaus Regling, managing director of the ESM, and Benoît Coeuré, member of the executive board of the ECB.

Both express a particularly tough line on Greece, rejecting two key
demands of the Greek government in the current phase of the
negotiations: no disbursement of the €1.9 billion to which Greece is
entitled before the “completion of the review”, which means compliance
with the type of “reforms” opposed by the Greek side (this sum
corresponds to profits made on Greek debt bonds and should be repaid to
Greece, according to the conditions of the ECB’s SMP program, since
February). And no “gradual approach” to reforms, as proposed by Greece's finance minister Yanis Varoufakis to allow Greece to get liquidity
before June and to facilitate an agreement.

Instead a “comprehensive list of reforms” is required, which should
include further deregulation of the labour market and cuts in pensions,
two “red lines” that the Greeks would not see crossed.

Regling went much further than Coeuré: commenting on the possibility
of a “Grexit”, that is of Greece leaving the eurozone, he said calmly
that this “is not the baseline scenario. But if it were to happen and we
work very, very hard to avoid it, then I think there would be a lot of
uncertainty because we don’t have any kind of similar experience.” He
added that “of course it would be more manageable than five or six years
ago because we have new institutions, the EFSF, the ESM, other
countries in the euro area have made tremendous adjustment progress such
as Ireland, Portugal, Spain”.

Regling also explicitly opposed the current plans of the Greek
government to reduce some taxes and increase the minimum wage and
pensions, saying that this amounts to “moving backward” and is putting
negotiations in danger. Moreover, he made it clear that the disagreement
goes deep since the Greek government thinks that the approach of its
predecessors is mistaken, whereas according to him, “the strategy was
working”. “This difference has not been resolved”, he says.

He concludes by ridiculing the idea that the creditors might “back
down because they don’t want a credit event, or accident”, saying that
“our procedures for providing loans are very clear, and very well
established. They are linked with conditionality, it is clearly written
in the ESM treaty. We need a unanimous decision of our shareholders and
the approval of six EU parliaments, and the parliaments definitely will
check very carefully whether the conditionality — which is a key
requirement — is met.”

It’s worth remembering that the hypothesis that despite their
intimidating declarations the Europeans will at the end of the day make
concessions and, to quote Varoufakis,
“admit their mistakes”, is the one adopted so far, publicly at least,
by the Greek government. But the soundbites coming from the creditors’
side point to something radically different: either SYRIZA accepts
continuing the policy of the memoranda, or it will have to endure until
the end the consequences of the ongoing strangulation.

Without friends

The Greek government’s isolation has become even more perceptible
after the recent statements by US President Barack Obama and US treasury secretary
Jack Lew urging the Greek government to move quickly down the path of
“reforms” and comply with the demands of its creditors.

Relations with the US have further deteriorated since the decision of
the Greek government to let Savvas Xiros and other members of the
left-wing November 17 armed struggle group serve the rest of their
sentence in prison, in conformity with the newly passed law on
prison reform. The US reacted very strongly against what they consider
“freeing terrorists”, despite the fact that Xiros is in extremely poor
health.

It is absolutely clear that we are fast approaching the “moment of truth”.

At the same time, the prospect of immediate relief coming from
Russia, as a result of the recent visit of Greek Prime Minister Alexis
Tsipras to Moscow, seems to have faded. The agreement on a gas pipeline
that was expected to be signed this week, with a cash advance on future
revenue of €5 billion, was finally postponed after Tspiras’s meeting
with Gazprom’s president in Athens on April 21.

It may not be a coincidence that the Russian retreat happened the
same day the EU launched a legal attack on Gazprom on the rather dubious
charges of “market abuse” and “breaking the EU trust rules”.

Options

At this stage, the options remaining for the SYRIZA government seem to be restricted to the following.

The “good scenario”, the one which is still favoured
by the Greek government, is that the Europeans will make concessions,
and a compromise will be reached very soon. However, as the IMF
president made clear,
in order to get the €7.2 billion at stake in this four-month bridge
agreement, Greece needs to get a positive “review” and to conform fully
to the “reforms” agreed by to its predecessors. In any case, this
possibility has already been explicitly ruled out by European Commission president Jean-Claude Juncker, German finance minister Wolfgang
Schäuble and others, who made repeated statements these last days saying
that the only deadline to be considered is now June 30, and that no
money will be transferred to Greece before a “big deal” — in other words, another “rescue package” coming with the usual conditions.

The Greek government gives up. This is of course the avowed aim of the European powers. But in a recent interview with Reuters, Tsipras made it clear
that there are “political, not technical disagreements” on four key
issues: labour legislation, pension reform, a hike in value added taxes
and privatisations, which he referred to as “development of state
property” rather than asset sales. Making concessions on that bottom
line would amount to surrender and to political suicide for SYRIZA.

The Greek government defaults on the debt. In a recent interview with the Huffington Post,
Varoufakis said that if the government had to choose between paying its
creditors and paying salaries and pensions, it would prioritise the
second option. But of course such a choice means a decisive rupture and
exiting the eurozone (the scenario of a double currency within the euro
cannot last for more than a few weeks at the very best).

The complication here is that defaulting in May means defaulting on
IMF repayments, and this can entail enormous complications at the level
of trade (the IMF can take sanctions that will make access to private
credit for trade nearly impossible). Greece should preferably default on
the ECB/EFSF loans, but these repayments are due in the summer and it
seems nearly impossible to hold firm until then.

Preparing for confrontation

It is impossible at this stage to formulate which of the two last
scenarios, the only realistic ones, will prevail. The signals sent by
the government these last weeks are increasingly contradictory: on the
one hand, the dominant tone is that of confidence and optimism about the
possibility of reaching an agreement that would materialise the “honest compromise”, which is now Alexis Tsipras’s aim.

On the other hand, ministers belonging to Tsipras’s close circle,
such as interior minister Nikos Voutsis and labour mnister Panos
Skourletis, made statements such as “we’d like to stay on the ship called Europe, but if the captain pushes us overboard, we need to try to swim”.

Along the same lines, deputy finance minister Euclid Tsakalotos
declared on March 26 that “if you don’t entertain the possibility of a
rift in the back of your mind, then obviously the creditors will pass
the same measures as they did with the previous [government]”.

Contradictory statements have also been made on the issue of a
referendum in the case of a failure in the negotiations process. Such a
move appears necessary since it is true that SYRIZA’s mandate doesn’t
address such a possibility and has been explicitly based on the
hypothesis of breaking with austerity while staying in the euro.

In recent statements, senior ministers such as Varoufakis and Alekos Flabouraris,
who is the state minister and is close to Tsipras, referred to that
possibility, only to be contradicted by other SYRIZA figures such as a
member of European Parliament, Dimitris Papadimoulis.

The state of public opinion reflects this uncertainty. The enthusiasm
and the combative spirit of the first three weeks have now given way to
a mixed picture: the support for the government’s strategy is still
high, but significantly below its level of the previous months. There is calm in the streets.

The recent mobilisations seem restricted to certain sectors (the
anarchist milieu and local communities against gold mining in Skouries,
in northern Greece) and their effects are contradictory: the anarchist
agitation accelerated the vote in parliament of a bill liberalising the
conditions of imprisonment and ending the “high security” prison regime.

But the situation looks more confused in Skouries, with the police
turning against the demonstrators and the workers of the gold mines
marching in Athens to support the continuation of the extraction,
strongly backed by their Canadian-owned employers and the right-wing
opposition.

The main element fuelling this troubled atmosphere is, however, the
fact that the scaremongering on the theme of the “Grexit” remains
unchallenged at the level of broad public opinion. The right-wing
opposition and the mainstream media, increasingly hostile to the
government and using all possible arguments to push it towards full
surrender, associate the break with the eurozone with an apocalypse — as
they have done relentlessly since the start of the crisis.

But the response on the part of the government tends to be that this
perspective will be avoided thanks to the “honest compromise” to which
the Europeans will finally have to agree. Hardly a discourse, to say the
least, that can mobilise SYRIZA’s base and prepare society for an
eventual rupture with Europe.

With the Communist Party (KKE) still firmly holding to sectarian opposition, and its secretary general declaring that it would refuse any support to the government even in the case of a break with the eurozone, and the far-left Antarsya
repeating that the government has already surrendered, it is the
responsibility of SYRIZA’s left to propose the only sensible approach
that could avoid failure: holding firm on the line of confrontation with
the EU and prepare the popular movement and Greek society more broadly
to embark on a radically different trajectory, both at the domestic and
at the international level.